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H&M Q3 sales rise 5% as markdowns depress growth

H&M’s Q3 revenue growth was dampened by a need to offer more discounts, the Swedish fashion retail giant said Friday, although it also added that the cloud had a silver lining.

H&M

The company which also owns the Cos, & Other Stories, Weekday, Monki and Arket brands, said its total sales in the three months to August 31 rose 5% including VAT. That added up to a total of SEK59.383 billion. Sales without VAT were also up 5% to SEK51.229 billion, and in local currencies they rose only 4%.

It’s not a strong result for the firm that continues to expand and open new stores globally with around 400 planned for this year. The company’s store count was up around 9% year-on-year at the end of Q3, which makes the 5% sales increase look rather tepid.

As mentioned, it said that sales in the quarter were affected by a “significantly larger summer sale this year than in the corresponding quarter last year – both in terms of the number of items and the average discount per piece – which had a dampening effect on revenue growth.”

But there was one upside to this. The summer’s aggressive markdowns led to an improved inventory position and good conditions for the incoming autumn offer that is dropping in-store now. This has “helped sales of the autumn collections get off to a good start.”

The total number of stores in the group added up to 4,553 on 31 August compared to 4,135 on the same day last year.